The Six Key Points To Boost The Engineering SMEs

In the United States, there are more than 90,000 small and medium-sized engineering companies, which mean more than 90% in this line, according to industry estimates. Despite their majority, these firms still have multiple challenges to face in order to increase their productivity, competitiveness, and participation in the bidding processes in the country.

What Are The Key Points For SMEs Companies To Grow?

Experts in this area know very well what are the key points that should have a public policy that drives the development of these companies and in this way they can grow and continue to drive the economy.

According to Business Insider, who focused on the guilds of micro, small and medium enterprises, work must be done on eight key points.

1.- Government Collaboration

The first of these is that the National Government must condition or promote, for example, through incentives in the bidding process scores, to large companies so that they have the smallest as suppliers and also hire local labor because currently, this is only done if the firm decides so and it is not conditional.

The foregoing, according to trade union leaders, would allow small and medium-sized businesses to become sophisticated in the production chain and gain experience and thus, participate in smaller works in which their capabilities allow.

2.- Differential Rates For Technical Certifications

Second, leaders comment that there must be differential rates for technical certifications because for SMEs to supply a specific service they must meet that requirement and its value is the same for everyone.

They emphasize that if they need to have a certification in special welding or in the Unique Contractor Registry that they must have to tender, among others, they must pay the same as a large one.

3.- Improve the Hiring Processes of SMEs

A third aspect in which one must work according to the American Society of Engineers, is to improve the contracting processes of small and medium enterprises regarding specialized services that they can do in infrastructure, because today the requirements for these do not have to take into account the conditions of these types of companies, leaving them many times out of the process or preventing them from participating more in tenders.

4.- Improve the Internal Processes of SMEs

Given that small and medium-sized enterprises assume subcontracting roles of large firms, being an important part of the supply chain, the fourth key point of public policy work should focus on improving the internal processes of these types of companies to increase their productivity and quality in order to make their processes more efficient.

5.- Promote the Incorporation of New Technologies

The fifth point, also mentioned by this entity, has to do with promoting the incorporation of new technologies, especially Building Information Modeling in both manufacturing companies and construction companies, including those of associated services such as engineering. Its implementation will allow them to sophisticate the offer based on this type of tool, according to the entity.

6.- Promote New Financing Mechanisms for SMEs

The entity also emphasizes that new financing mechanisms for SMEs should continue to be promoted. At this point, it is emphasized that the security guarantees are a way to promote financial inclusion since it allows SMEs that do not own real estate to present other types of guarantees to obtain a loan from the financial sector.

Finally, the director of the American Society of Engineers said that it is not possible to continue taking competitiveness away from small and medium-sized companies in the sector due to operating costs that they must assume unequally.

Type Document Balance

The executives of the American Society of Engineers during their intervention in the Infrastructure Congress commented that the obligatory nature of the specifications for public works has been positive for the country because it brings more transparency and especially, seeks to benefit small and medium enterprises.

Citing data from the Observatory of the American Chamber of Infrastructure, managers said that previously 70% of the bidding processes presented a single bidder and now, in 86% of the cases more than two proposals are received at the close of the processes. Of these, 39% had between two and 10 bidders, 15% between 11 and 20 and 32% more than 20.

SMEs and Engineering SMEs Definition

At the international level, the definition of SMEs is mainly determined by the level of sales of the companies and the number of employees. Clearly, the criteria of the company sector is of less use. Despite these discrepancies in the definition of SMEs, it can be concluded that microenterprises prevail, as they border around 80% of the total, followed by SMEs with a participation close to 4%.

In the particular case of construction SMEs, a similar trend is observed. In the United States, 73% of building construction companies have fewer than 100 employees and 42% in the case of civil works construction. In the case of Spain, practically all construction companies are MSMEs and in Chile, they reach 92%.

Factors that Affect the Survival of Companies

There are different factors that affect the survival of companies and, therefore, their size, among these:

Generational change and succession problems.

Weakness in its financial structure.

The economic environment.

In the case of Colombia, a company lives on average only 12 years. In companies in the construction sector, the average age reaches 10 years. Companies analyzed in national surveys exceed the national average, where 70% are more than 10 years old.

The efficiency measures analyzed, show that smaller companies are characterized by having a more efficient cost structure in the construction sector, while in consulting companies the difference is not significant.

This is explained, in part, because small businesses can be more efficient in purchasing inputs and labor at a lower price. In contrast, large consulting and construction companies are more efficient according to the revenue vs. assets, which is consistent with the greater turnover of these companies.

On the other hand, innovation is an important growth tool, regardless of its activity, be it consulting or construction.